Correlation Between Park Hotels and Cembra Money
Can any of the company-specific risk be diversified away by investing in both Park Hotels and Cembra Money at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Park Hotels and Cembra Money into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Hotels Resorts and Cembra Money Bank, you can compare the effects of market volatilities on Park Hotels and Cembra Money and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Park Hotels with a short position of Cembra Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Cembra Money.
Diversification Opportunities for Park Hotels and Cembra Money
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Park and Cembra is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Cembra Money Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cembra Money Bank and Park Hotels is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Park Hotels Resorts are associated (or correlated) with Cembra Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cembra Money Bank has no effect on the direction of Park Hotels i.e., Park Hotels and Cembra Money go up and down completely randomly.
Pair Corralation between Park Hotels and Cembra Money
Assuming the 90 days trading horizon Park Hotels Resorts is expected to generate 2.88 times more return on investment than Cembra Money. However, Park Hotels is 2.88 times more volatile than Cembra Money Bank. It trades about 0.04 of its potential returns per unit of risk. Cembra Money Bank is currently generating about 0.03 per unit of risk. If you would invest 1,009 in Park Hotels Resorts on September 26, 2024 and sell it today you would earn a total of 499.00 from holding Park Hotels Resorts or generate 49.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.02% |
| Values | Daily Returns |
Park Hotels Resorts vs. Cembra Money Bank
Performance |
| Timeline |
| Park Hotels Resorts |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Cembra Money Bank |
Park Hotels and Cembra Money Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and Cembra Money
The main advantage of trading using opposite Park Hotels and Cembra Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, Cembra Money can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cembra Money will offset losses from the drop in Cembra Money's long position.| Park Hotels vs. Ion Beam Applications | Park Hotels vs. Public Storage | Park Hotels vs. Gamma Communications PLC | Park Hotels vs. Check Point Software |
| Cembra Money vs. Lindsell Train Investment | Cembra Money vs. PPHE Hotel Group | Cembra Money vs. Air Products Chemicals | Cembra Money vs. Alaska Air Group |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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